Yesterday the International Development Select Committee (IDSC) of the House of Commons released a report analysing the Department for International Development’s (DFID) performance in 2008/9 and the Department’s recent White Paper, which sets out its strategy for the coming year. The report quotes from evidence submitted by RESULTS UK late last year, including our recommendation that further funding for the International Monetary Fund (IMF) from the UK is made conditional on changes in policy and processes at the IMF – something we have been pushing for over the last few years through grassroots actions and high-level lobbying. It’s great to see the IDSC explicitly recognising our concerns, and we hope to see a full response from DFID shortly.
More information including an explanation of how the IMF impacts on health and education in the developing world is below.
In DFID’s 2009 White Paper they explained that due to a rising budget and decreasing staffing, they will be providing more funding through multilateral institutions such as the World Bank and the IMF. These bodies have enormous influence on development and on the economic policies of low-income countries. Both institutions have a history of imposing controversial economic policy conditions such as privatisation and market liberalisation on countries that borrow from them. But in many cases countries have very few other options for finance: the World Bank manages the world’s largest source of interest-free loans and grant assistance to low-income countries, while the IMF was designed as a crisis-response facility to give loans for countries in temporary economic difficulties who are unable to pay for the goods they import from other countries – and countries in crisis have very few options for support.
In addition, there is a lot of concern about the impact of the IMF’s strict requirements for borrowing countries to keep inflation and fiscal deficits (how much a country borrows to fund its government spending) very low. In some cases these restrictions mean that countries do not have the policy flexibility to be able to employ sufficient numbers of teachers and healthworkers, which seriously weakens health and education systems in poor countries around the world – for more information see the recent report from Action for Global Health ‘The IMF and the human resources for health crisis in the developing world’.
An assessment of how DFID plan to push for reforms of these international financial institutions (IFIs) was therefore central to the IDSC’s report, which concluded that ‘Witnesses were not impressed by the White Paper’s stance on IFI reform. BOND found it “disappointing that the White Paper is not clearer about the type of governance reforms DFID envisions for the IMF and World Bank.” Results UK also saw “few specific proposals” on reform, and stated that “the circumstances in which funding for a programme would be reduced or withheld should be clearly communicated.”‘
In their final recommendation on the IMF, the IDSC asked DFID to provide them with information on the Department’s future plans for reform at the IMF. We look forward to seeing this response, and will be pushing the Department to aim for fundamental reforms to the IMF policies that make it difficult for developing countries to employ sufficient numbers of teachers and healthworkers.